The results, however, come with a very important caveat: the Iowa
Poll was conducted Tuesday through Friday, and the results from the
first two days were quite different from the last two days.

[T]he four-day results don’t reflect just how quickly
momentum is shifting in a race that has remained highly fluid for
months. If the final two days of polling are considered separately,
Santorum rises to second place, with 21 percent, pushing Paul to third,
at 18 percent. Romney remains the same, at 24 percent.

“Momentum’s name is Rick Santorum,” said the Register’s pollster, J. Ann Selzer.

Matthew Yglesias, now over at Slate, predicts a vibrant economy for 2012. I'm a natural-born optimist, so I want to believe his take:

This increase in economic activity will boost state and local tax
revenue and end the already slowing cycle of public sector layoffs.
Re-employment in the construction, durable goods, and related
transportation and warehousing functions will bolster income and push up
spending on nondurables, restaurants, leisure and hospitality, and all
the rest. Happy days, in other words, will be here again.

None of that means we’ll remember 2012 as the best of times. What
we’re talking about is a spurt of rapid employment growth from a low
base, not a tight labor market and rapidly rising wages like we had in
the late ’90s. But compared with the past four years, it’ll look like a
magnificent boom.

Unless, that is, policymakers screw it up. If you imagine a world in
which several million people go from unemployed to daily commuting, and
large numbers of people abandon their roommates and get a place of their
own, then there are likely going to be spikes in the prices of
gasoline, rent, and other commodities. This will temporarily push
inflation above normal levels and increase pressure on the Fed to
tighten money and nip the boom in the bud. The central bank’s recent
statements indicate that they won’t do this, but they haven’t been as
clear as they should be. Betting against policymaker screw-ups is a
risky proposition—the Eurozone elite managed to spend the entire fall
acting in bizarre and counterproductive ways—but barring a
trade-destroying natural disaster, we’re looking at a recovery, if we
want one.

Would be nice, wouldn't it? Then again, who would want to screw up our economic policy at this point?

A commenter at David Andolfatto's blog -- where he once again appears to distort models to prove that Paul Krugman's attack on Robert Lucas was unjustified -- named Jefferson Smith explains what is really going on in the econ blogosphere wars (it's in a comment that I don't know how to link to, so here it is in its entirety because it's spot on and absolutely hilarious; kudos!):

Jefferson Smith
said...

Like other commenters, I'm a little puzzled as to why we're spending all
this effort to read between the lines of speakers who are still with us
and have every opportunity to clarify their remarks themselves if they
choose to. However, since that's what's afoot, let me return the favor
you're doing Lucas and explain what I believe Krugman is really saying. I
will attempt as best I can to express this mathematically.

As I
understand it, economists propose models (M) designed to explain data
(D) in such a way as to produce a generally accurate picture of what's
actually happening in the world. The goal is:

M + D = F

where
F is, approximately, the facts -- what we see actually happening, like
interest rates rising or falling and such. (Sorry, your site here isn't
allowing me to do the wavy equal sign for approximation. My own model
will be accordingly limited. But, onward.)

Once we have a proven model, we can use it to decide upon policies (P):

M -> P

The
problem is that rightist economists have a PREFERRED set of policies.
Call this P(r). Of course, so do liberal/left economists; let's call
this one P(k), with "k" standing for Keyenesian or Krugmanite, as you
wish. What's been happening in recent years is that M(r), the models
preferred on the right, when added to D, do not equal or approximate F.
But M(k), the liberal / Keyesian models, do. Therefore, M -> P(r)
doesn't hold; a correct M appears to imply P(k).

Krugman has
devoted tens of thousands of words over these last few years to
chronicling the right's various responses to this. One popular one has
been to deny or redefine D, replacing actual D with a right-preferred
D(r): claims, for instance, that inflation is up even though it isn't.
Similarly with F, which has given way on the right to a mythical F(r) --
a world in which, for instance, Spain was profligate before the crash,
Ireland is doing well now, and, more to the immediate point, stimulus
spending didn't help the U.S. economy. All of these are attempts to
shore up the implausible view that, because P(r) MUST be the correct
policies, the model we should be using is M(r):

M = M(r)

even though it's increasingly clear that

M = M(k).

What
Krugman is saying about Lucas is that he has found yet another strategy
for aligning M and M(r): simply redefine M(r) -- where "r" means both
rightist and, for this purpose, Ricardian -- to be something other than
it is. In other words, there is now a "Lucasian" M(r), which we'll call
L(r). Your analysis above is an attempt to explicate and defend this
special kind of Ricardian modeling.

So here's where I think
you're talking past Krugman. He doesn't mean that Lucas "doesn't
understand" Ricardian equivalence in the sense that he fails to grasp
the way M(r) would be explained in textbooks. He means that Lucas
willfully insists that M(r) is really L(r), because his ultimate goal is
to save P(r) against an F that refuses to point to that outcome. He is
also unhappy that

M(k) + D = F -> P(o)

where P(o) is
the set of policies advocated in the Obama administration by people like
Christine Romer. So as a further rhetorical flourish, he insults Romer
in the way you've mathematically tried to justify.

1 comment:

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About the American Human

The American Human is written by Calvin Ross, a retired teacher who at various points in life has been a musician, woodworker, restaurateur, narrator, English teacher in Japan, novelist, technology journalist, and private tutor to Japanese children here in the U.S.

Happily residing in the wine country of Sonoma County north of San Francisco, Calvin has lived in the Philippines, the Netherlands, and the aforementioned Japan, as well as in Chicago, Colorado, Georgia, and many different towns in California, including, of all places, the Mojave Desert.

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